Saturday, 26 Sep 2020

EMERGING MARKETS-Bets for Thai rate hold aid baht as weak dollar dominates

    * Graphic: World FX rates tmsnrt.rs/2egbfVh
    * Graphic: Foreign flows into Asian stocks tmsnrt.rs/3f2vwbA
    * Bank of Thailand policy decision expected at 0700 GMT
    * Philippines inflation ticks higher in July
    * Indonesia Q2 GDP shrinks more than expected

    By Rashmi Ashok
    Aug 5 (Reuters) - Thailand's baht rose to a one-month high
on Wednesday ahead of a central bank statement on interest rates
that is expected to hold fire on further cuts and save its
increasingly limited policy ammunition for later in the year.
    Currencies and stocks across Asia's emerging markets were
higher across the board in morning trade, with the ringgit
, the won and the Taiwanese dollar all
turning in solid gains against a broadly weaker U.S. dollar. 
    With inflation sluggish and its economy reeling from a
collapse in tourism and demand for its exports, the recent
strength of the baht also supports the case for another cut in
Thai rates, analysts say. 
    Its policymakers, however, are hemmed in by three moves this
year which already have rates at a record low of 0.50% and most
expect no move on policy on Wednesday.
    "While the BOT believes that the economy may have bottomed
(out), it is likely to take issue with the baht's recent
appreciation," analysts at DBS Research pointed out in a note.
    In the past, the BOT has repeatedly warned against undue
appreciation in the baht. Wednesday's rise put it on
track for its third-straight weekly gain. 
    The BOT's decision is expected at around 0700 GMT.
    In the Philippines, data showed annual inflation picked up
to 2.7% in July, beating expectations and trending towards the
upper end of the central banks target range.
    Analysts at Goldman Sachs said in a note they expected
interest rates to be kept unchanged for the rest of 2020, while
adding the situation was more fluid in light of recent events. 
    "There are risks of further monetary easing given
uncertainties around the virus path, containment policy and the
growth recovery, especially after fresh lockdown restrictions
were imposed in Metro Manila and nearby provinces last week,"
the U.S. investment bank said.  
    The Philippine peso was subdued, while stocks
rose 1.5%, recovering some of its losses over the past month.
    Data showed Indonesia's economy shrank by a
sharper-than-expected 5.32% in the second quarter on-year, its
weakest performance since 1999, as efforts to contain the
coronavirus pandemic hit consumption.
    Indonesian stocks ticked lower immediately after the
data was released, but recovered to trade 0.2% firmer, while the
rupiah barely budged. 
    
    HIGHLIGHTS
    ** Indonesian 10-year benchmark yields fell 1 basis point to
6.829% while 3-year benchmark yields ticked up 0.5 basis points
to 5.344%​​ 
    ** In the Philippines, top index gainers were Metropolitan
Bank and Trust Co up 5.07% and lender BDO Unibank Inc
 4.53% higher
    ** Top gainers on the Singapore STI included Sembcorp
Industries Ltd up 4.71% and Mapletree Commercial Trust
 with a gain of 3.26% 
    
  Asia stock indexes and                                     
 currencies at   0446 GMT                               
 COUNTRY      FX RIC         FX     FX    INDEX  STOCK  STOCK
                          DAILY  YTD %               S  S YTD
                              %                  DAILY      %
                                                     %  
 Japan                    +0.10  +2.86           -0.23  -4.80
 China                    +0.28  +0.11            0.29  10.86
 India                    +0.22  -4.68            1.06  -7.85
 Indonesia                +0.21  -4.41            0.17  -19.3
                                                            0
 Malaysia                 +0.50  -2.60           -0.05  -0.86
 Philippines              +0.09  +3.27            1.75  -24.8
                                                            1
 S.Korea                  +0.40  -2.77            1.04   4.83
 Singapore                +0.16  -1.93            0.68  -21.4
                                                            1
 Taiwan                   +0.61  +2.54            0.70   6.68
 Thailand                 +0.26  -3.48           -0.10  -15.8
                                                            5
 
 (Reporting by Rashmi Ashok in Bengaluru; editing by Patrick
Graham and Kim Coghill)
  

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